Inspector: $6B Lost Iraq Cash Now Accounted For

A U.S. Iraq inspector general report said this week that the $6.6 billion cash that they though had been lost in the early days of the Iraq occupation has finally been accounted for.

“The mystery of $6 billion that seemed to go missing in the early days of the Iraq war has been resolved according to a new report,” said CNN national security producer Charles Keyes on Wednesday. “New evidence shows most of that money, $6.6 billion, did not go astray in that chaotic period, but ended up where it was supposed to be, under the control of the Iraqi government, according to a report from the office of the Special Inspector General for Iraq Reconstruction or SIGIR.”

According to a previous SIGIR report, Stuart Bowen, the special inspector general for Iraq reconstruction, had testified that out of the $10 billion shipped from the United States to Iraq, up to $6.6 billion went missing because of “weaknesses in [the Department of Defense’s] financial and management controls,”, Keyes reported.

The cash had been taken from Iraq’s own international assets which were amassed before the war in the UN-run Oil for Food Program. After the U.S. invasion in 2003, it was transferred to Iraq to help finance reconstruction and development projects under the Coalition Provisional Authority, an organization spearheaded by U.S. and dissolved in 2004. The original plan was to keep majority of the cash in accounts in the Central Bank of Iraq. However, U.S. occupation authorities also vaulted a few hundred million in one of Saddam Hussein’s palaces that they used as their base of operations for financial needs.

According to the previous SIGIR report, there was no solid conclusion as to the whereabouts of the cash after the Coalition Provision Authority was disestablished in 2004. However, a new SIGIR report discovered that the seemingly lost money was legally transferred to accounts at the Central Bank of Iraq.

“But the inspector general’s new report says almost all the $6.6 billion was properly handed over to Iraq and its Central Bank,” Keyes’ written report says. “’SIGIR was able to account for the unexpected [Development Fund of Iraq] funds remaining in DFI accounts when the [Coalition Provisional Authority] dissolved in June 2004,’ the new report says. ‘Sufficient evidence exists showing that almost all of the remaining $6.6 billion remaining was transferred to actual and legal [Central Bank of Iraq] control.’”

This revelation does not necessarily imply that all of the billions of cash the U.S. spent in Iraq have been entirely accounted for. According to the SIGIR report, inspectors are still trying to determine what happened to the cash that U.S. officials stored in one of Saddam Hussein’s former palaces.

“While the bulk of the money was transferred to the Central Bank of Iraq, $217 million remained in a vault in a former presidential palace and was held by the U.S. Defense Department and was doled out for a variety of projects and payrolls, the report says,” Keyes reported. When an audit was conducted by SIGIR on February 2008, they found that out of the $217 million vaulted at the palace, $24.45 million was still there and this amount was later turned over to Iraq.

After the withdrawal of the U.S. troops is completed in January 2012, another report on DoD spending on contracting projects in Iraq will be released.